Sen. Charles Schumer (D-NY)
According to Schumer, the lawsuit will destroy the publishing industry

A U.S. senator has urged the Department of Justice to drop the eBooks lawsuit against Apple and certain book publishers.

Sen. Charles Schumer (D-NY) recently wrote a memo to the U.S. Department of Justice via The Wall Street Journal in an effort to put a stop to the eBooks lawsuit filed against Apple and two other book publishers. According to Schumer, the lawsuit will destroy the publishing industry.

Schumer said that Amazon had a strong hold of the eBooks market early on when it launched its Kindle e-reader devices. In fact, Amazon had about 90 percent of the eBooks market with no real competition. This made it so publishers and authors were at Amazon's mercy when it came to pricing.

Amazon would set the price for its eBooks far below normal hardcover value because it had an extensive library. Publishers either had to accept these lower prices or avoid the eBooks market entirely, which didn't seem to make sense when everything is going digital.

However, when Apple came along with iBooks, it employed an agency sales model with five book publishers, including Hachette Livre (Lagardère Publishing France); Harper Collins (News Corp., U.S.A.); Simon & Schuster (CBS Corp., U.S.A.); Penguin (Pearson Group, United Kingdom), and Verlagsgruppe Georg von Holzbrinck (owner of inter alia Macmillan, Germany).

An agency sales model means that publishers were allowed to set the price of a book and Apple would take a 30 percent cut. In addition, the publishers could not let rivals sell the same book at a lower price.

The Department of Justice saw this as anticompetitive, claiming that Apple was trying to thwart Amazon's dominance in order to have a successful iBooks launch for its brand-new tablet at the time: the iPad.

However, Schumer believes that Apple's entry into the eBooks market finally gave Amazon some competition and even lowered some eBook prices for consumers. Users also had a larger range of books and platforms to choose from.

"I am concerned that the mere filing of this lawsuit has empowered monopolists and hurt innovators,” said Schumer. “I believe it will have a deterrent effect not only on publishers but on other industries that are coming up with creative ways to grow and adapt to the Internet."

It was recently announced that eBook trial was set for June 3, 2013. Harper Collins, Simon & Schuster and Hachette Livre decided to settle the case with the U.S. DOJ a couple of months ago, but Apple, Penguin and Macmillan have decided to fight the antitrust case. 

"The administration needs to reassess its prosecution priorities," continued Schumer. "Justice Department officials currently have comprehensive guidelines in place to determine when they should challenge mergers, but they have no such guidelines for non-merger investigations. It's time to come up with some. These new guidelines should take a broad, pragmatic view of the market as a whole. As the e-books case shows, this kind of perspective is sorely missing today."

Source: The Wall Street Journal

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